JP Morgan Interview Questions | Payout

Question

You are at a Casino and have two dices to play with. You win $10 every time you roll a 5. If you play till you win and then stop, what is the expected payout?

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Dhruv2301 55 years 2 Answers 1283 views Great Grand Master 0

Answers ( 2 )

  1. Assumptions: On his 6th roll he fails
    taking n=5
    probability of rolling a five = 1/6
    Expected payout = (1/6)*5*10 ~8.33

  2. Assumption : It costs $5 every time you want to play.
    There are 36 possible combinations with two dice.
    Of the 36 combinations, there are 4 combinations that result in rolling a 5[(1,4),(4,1),(2,3),(3,2)].
    This means that there is a 4/36 or 1/9 chance of rolling a 5.
    A 1/9 chance of winning means you’ll lose eight times and win once.
    Therefore, your expected payout is equal to $10.00 * 1 – $5.00 * 9= -$35.00.

  3. E[x]=1/9(10+E[x]) -5*8/9
    => E[x] = -15/4

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